How advisers lend a helping hand with clients' physical, emotional and financial emergencies.

IFA&E: five stories of helping clients in emergencies

Martin Bamford

Managing director, Informed choice

Sometimes events conspire to make life as difficult as possible for people, with multiple issues combined to cause serious problems.

We recently helped an individual in his late 50s after he returned to the UK, facing a financial emergency. An opportunity to work for several years in the Middle East had turned sour when his role was made redundant. He quickly spiralled into debt in an attempt to maintain an expensive expat lifestyle.

When he eventually accepted the situation was irrevocable, he returned to the UK and was promptly told by his wife that she wanted a divorce.

He was referred to us by an existing client who saw how desperate things had become for his friend. We analysed the situation and created a financial plan. This allowed him to propose a reasonable financial settlement to his ex-wife, using his property and pension assets to clear the debts and get back on a stable footing.

The cashflow forecast we built, along with regular reviews to keep things on track, informed his future budget and how he could rebuild savings for retirement. This would only be delayed by four years as a result of the financial effect of redundancy and divorce.

With his debts cleared, an affordable home and budget in the UK, and the divorce settled, he was able to regain focus and find new employment in his field.

He tells us our calm assessment of the situation saved him from making irrational and potentially disastrous decisions, especially at a time when emotions were running high and it felt like there was no solution.

Being the voice of reason and allowing experience to guide our recommendations makes financial planners a great place to turn to in times of crisis.

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Rhian Morgan

Financial planner, Acumen Financial Planning

Our head office is based in Aberdeen, a small city that has benefited from the oil and gas sector in recent decades.

The drop in oil prices and the subsequent downturn has had a significant effect in Aberdeen. In 2016, the UK’s oil and gas industry was estimated to have lost a quarter of the workforce, or 120,000 jobs. We have helped some of our clients working in this industry adjust their plans.

In one case, our clients Stewart and Lesley were very worried because Stewart, a 58-year-old engineer, was made redundant several years before his planned retirement age of 65. He had not found alternative work as quickly as he had hoped. His wife Lesley, aged 52, had a full-time job in a different sector, but they were concerned about having to face significant changes in their lifestyle.

They were fortunate to be mortgage-free and had some savings in a diversified portfolio. They came in for a meeting in which we updated all figures, including taking away expenses associated with Stewart’s working life, such as memberships, and additional travel costs. We reduced holiday expenditure later in life, to take account of the fact they would not be going abroad from theirs 80s onwards.

Adjusting the planned expenditure on upgrading their house, to allow for essential upgrades only, brought annual expenditure down by an average of £7,500 a year.

In doing this we were able to demonstrate that, although restricted in their wriggle room (additional spend capacity), with conservative market returns, they could achieve their goal of being financially independent with Lesley working until the age of 61, and Stewart not working again.

Although Stewart is hoping to get further work, this would now be a bonus. The pressure to do so had been lifted and he left the meeting a changed man, from being physically anxious on arrival to smiling and calm.

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Matthew Pescott Frost

Director, Matthew Douglas IFA

The most desperate encounter I have had with a client involved a couple who were facing the prospect of having their home repossessed. Their modest £50,000 interest-only mortgage was due for repayment and they had no capital to meet this commitment.

They had a poor credit rating and more than £100,000 worth of credit card debt, with monthly interest accruing at the rate of more than £2,000 per month.

The situation looked hopeless, until we identified they had originally met while working for the same employer with, what turned out to be, membership of a generous final salary pension scheme.

They had previously been advised this was an important benefit and it could not possibly be in their interests to consider transferring this to any kind of money purchase arrangement. So this option had never been seriously explored.

They were both in their mid-50s and had no option to access these pensions until reaching the age of 60, hence the need to consider this option. They were a middle-income, childless couple who both worked with a combined salary of around £50,000 per year. This gave them a monthly income after tax of approximately £3,000 per month.

Sadly, their credit card and mortgage debt was leaving them just £500 per month to live on. They had no prospect of reducing their liability and faced the threat of losing their home.

Despite a relatively high critical yield, their combined final salary pensions provided immediate access to £120,000 of tax-free capital. This allowed them to clear the mortgage and a large proportion of their credit cards.

Five years later they are still working. They have downsized their property, cleared all their remaining debt and actively funded employer-sponsored pension schemes. The original pensions have recovered the lost value of the tax-free withdrawal.

Leave a comment!

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Mike Carberry

Financial planner, Penguin Wealth

A client of mine was on a business trip in Australia. He called me one morning to tell me he had torn his Achilles tendon the previous day in a fall. He was in extreme pain and immobile and asked me what his options were regarding his medical insurance.

He had received emergency treatment in Australia, via his company’s travel insurance. But he did not want to have surgical treatment there because this would put him out of action and away from his family.

Within 24 hours, following conversations with his private medical insurer, I had booked him a business flight back to the UK. I also arranged a private consultation with a senior consultant surgeon for his return. When he arrived in the UK I organised private transportation back to Cardiff: a long, uncomfortable journey made bearable. The following day he was out of surgery and recovering.

If he had not called, he would have been stuck in Australia away from his loved ones. But he knew he could call us any time. We invested time in him and he was appreciative. Always go the extra mile.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Angus Branfield

Director, EQ Investors

One of our UK-based clients holds some US execution-only investments. He received what he thought was a regular request from the US Internal Revenue Service (IRS) for tax information regarding these investments. It required him to complete a form and fax it back to the IRS.

Although we have no involvement with these investments, as the client did not have access to a fax machine, he asked if we could send it on his behalf. We agreed to do so, but on review of the form and the requested information we became suspicious.

Further investigation revealed our concern was well-founded. The form was not from the IRS but an incredibly realistic fake, which would have involved the client providing a fraudster with personal financial information. At that point we, of course, declined to send the fax.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Martin Bamford

Managing director, Informed choice

Sometimes events conspire to make life as difficult as possible for people, with multiple issues combined to cause serious problems.

We recently helped an individual in his late 50s after he returned to the UK, facing a financial emergency. An opportunity to work for several years in the Middle East had turned sour when his role was made redundant. He quickly spiralled into debt in an attempt to maintain an expensive expat lifestyle.

When he eventually accepted the situation was irrevocable, he returned to the UK and was promptly told by his wife that she wanted a divorce.

He was referred to us by an existing client who saw how desperate things had become for his friend. We analysed the situation and created a financial plan. This allowed him to propose a reasonable financial settlement to his ex-wife, using his property and pension assets to clear the debts and get back on a stable footing.

The cashflow forecast we built, along with regular reviews to keep things on track, informed his future budget and how he could rebuild savings for retirement. This would only be delayed by four years as a result of the financial effect of redundancy and divorce.

With his debts cleared, an affordable home and budget in the UK, and the divorce settled, he was able to regain focus and find new employment in his field.

He tells us our calm assessment of the situation saved him from making irrational and potentially disastrous decisions, especially at a time when emotions were running high and it felt like there was no solution.

Being the voice of reason and allowing experience to guide our recommendations makes financial planners a great place to turn to in times of crisis.

Martin Bamford

Managing director, Informed choice

Sometimes events conspire to make life as difficult as possible for people, with multiple issues combined to cause serious problems.

We recently helped an individual in his late 50s after he returned to the UK, facing a financial emergency. An opportunity to work for several years in the Middle East had turned sour when his role was made redundant. He quickly spiralled into debt in an attempt to maintain an expensive expat lifestyle.

When he eventually accepted the situation was irrevocable, he returned to the UK and was promptly told by his wife that she wanted a divorce.

He was referred to us by an existing client who saw how desperate things had become for his friend. We analysed the situation and created a financial plan. This allowed him to propose a reasonable financial settlement to his ex-wife, using his property and pension assets to clear the debts and get back on a stable footing.

The cashflow forecast we built, along with regular reviews to keep things on track, informed his future budget and how he could rebuild savings for retirement. This would only be delayed by four years as a result of the financial effect of redundancy and divorce.

With his debts cleared, an affordable home and budget in the UK, and the divorce settled, he was able to regain focus and find new employment in his field.

He tells us our calm assessment of the situation saved him from making irrational and potentially disastrous decisions, especially at a time when emotions were running high and it felt like there was no solution.

Being the voice of reason and allowing experience to guide our recommendations makes financial planners a great place to turn to in times of crisis.

Rhian Morgan

Financial planner, Acumen Financial Planning

Our head office is based in Aberdeen, a small city that has benefited from the oil and gas sector in recent decades.

The drop in oil prices and the subsequent downturn has had a significant effect in Aberdeen. In 2016, the UK’s oil and gas industry was estimated to have lost a quarter of the workforce, or 120,000 jobs. We have helped some of our clients working in this industry adjust their plans.

In one case, our clients Stewart and Lesley were very worried because Stewart, a 58-year-old engineer, was made redundant several years before his planned retirement age of 65. He had not found alternative work as quickly as he had hoped. His wife Lesley, aged 52, had a full-time job in a different sector, but they were concerned about having to face significant changes in their lifestyle.

They were fortunate to be mortgage-free and had some savings in a diversified portfolio. They came in for a meeting in which we updated all figures, including taking away expenses associated with Stewart’s working life, such as memberships, and additional travel costs. We reduced holiday expenditure later in life, to take account of the fact they would not be going abroad from theirs 80s onwards.

Adjusting the planned expenditure on upgrading their house, to allow for essential upgrades only, brought annual expenditure down by an average of £7,500 a year.

In doing this we were able to demonstrate that, although restricted in their wriggle room (additional spend capacity), with conservative market returns, they could achieve their goal of being financially independent with Lesley working until the age of 61, and Stewart not working again.

Although Stewart is hoping to get further work, this would now be a bonus. The pressure to do so had been lifted and he left the meeting a changed man, from being physically anxious on arrival to smiling and calm.

Matthew Pescott Frost

Director, Matthew Douglas IFA

The most desperate encounter I have had with a client involved a couple who were facing the prospect of having their home repossessed. Their modest £50,000 interest-only mortgage was due for repayment and they had no capital to meet this commitment.

They had a poor credit rating and more than £100,000 worth of credit card debt, with monthly interest accruing at the rate of more than £2,000 per month.

The situation looked hopeless, until we identified they had originally met while working for the same employer with, what turned out to be, membership of a generous final salary pension scheme.

They had previously been advised this was an important benefit and it could not possibly be in their interests to consider transferring this to any kind of money purchase arrangement. So this option had never been seriously explored.

They were both in their mid-50s and had no option to access these pensions until reaching the age of 60, hence the need to consider this option. They were a middle-income, childless couple who both worked with a combined salary of around £50,000 per year. This gave them a monthly income after tax of approximately £3,000 per month.

Sadly, their credit card and mortgage debt was leaving them just £500 per month to live on. They had no prospect of reducing their liability and faced the threat of losing their home.

Despite a relatively high critical yield, their combined final salary pensions provided immediate access to £120,000 of tax-free capital. This allowed them to clear the mortgage and a large proportion of their credit cards.

Five years later they are still working. They have downsized their property, cleared all their remaining debt and actively funded employer-sponsored pension schemes. The original pensions have recovered the lost value of the tax-free withdrawal.

Mike Carberry

Financial planner, Penguin Wealth

A client of mine was on a business trip in Australia. He called me one morning to tell me he had torn his Achilles tendon the previous day in a fall. He was in extreme pain and immobile and asked me what his options were regarding his medical insurance.

He had received emergency treatment in Australia, via his company’s travel insurance. But he did not want to have surgical treatment there because this would put him out of action and away from his family.

Within 24 hours, following conversations with his private medical insurer, I had booked him a business flight back to the UK. I also arranged a private consultation with a senior consultant surgeon for his return. When he arrived in the UK I organised private transportation back to Cardiff: a long, uncomfortable journey made bearable. The following day he was out of surgery and recovering.

If he had not called, he would have been stuck in Australia away from his loved ones. But he knew he could call us any time. We invested time in him and he was appreciative. Always go the extra mile.

Angus Branfield

Director, EQ Investors

One of our UK-based clients holds some US execution-only investments. He received what he thought was a regular request from the US Internal Revenue Service (IRS) for tax information regarding these investments. It required him to complete a form and fax it back to the IRS.

Although we have no involvement with these investments, as the client did not have access to a fax machine, he asked if we could send it on his behalf. We agreed to do so, but on review of the form and the requested information we became suspicious.

Further investigation revealed our concern was well-founded. The form was not from the IRS but an incredibly realistic fake, which would have involved the client providing a fraudster with personal financial information. At that point we, of course, declined to send the fax.

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